PREMIER PROPERTY DEVELOPMENTS LTD v OHL LTD [2023] NZHC 1962 [27 July 2023]
[1] By this proceeding, Premier Property Developments Limited (Premier) seeks to recover the $692,000 balance of the $3.500 million purchase price withheld by OHL Limited (OHL) on its October 2018 acquisition of Premier’s property at 1/2 Kitchener Street in Auckland’s central business district. (The balance is held by a stakeholder, lawyers Alexander Dorrington.)
[2] OHL counterclaims for damages under the Fair Trading Act 1986 and for breach of warranties in respect of Premier’s representations as to the property’s tenancies and plant. Premier replies any loss OHL suffered was the result of its contributory negligence and failure to mitigate.
Background
[3] The subject building is a 14-storey unit-titled development, comprising Body Corporate 115657. Its basement and ground floor is one of the development’s two units, Unit A. The other — Unit B, acquired by OHL in February 2018 — has two carpark and ten other levels for commercial occupation.
[4] OHL’s director, Mark Hotchin, also is director of other companies with property interests, including Omara Property Group Limited (Omara). On OHL’s acquisition of Unit B, Omara took over as the body corporate’s manager. Mr Hotchin was assisted in those endeavours by a Kerry Finnigan (and others).
[5] Unit A is one of two properties owned by Premier, the other being a commercial property in Tauranga. In 2016, Premier was offered $3.750 million for Unit A, conditional on the purchaser’s due diligence. Premier unsuccessfully counter-offered at $4.750 million and the potential transaction ended.
[6] In August 2017, Premier appointed Colliers International (Colliers) its general agent to sell Unit A. The Colliers team comprised Adam White, Gawan Bakshi and Simon Felton. Colliers appraised Unit A as having an estimated likely sale value of
$4.000–$4.200 million. At about the same time, Colliers presented Premier with an offer of $3.920 million for Unit A, again conditional on the purchaser’s due diligence. Premier unsuccessfully counter-offered at $4.350 million and that potential transaction also ended.
[7] Knowing Mr Hotchin then to be in the process of acquiring Unit B, Mr White saw him a prospective purchaser of Unit A and contacted Mr Finnigan by email in November 2017 with copies of Unit A’s leases and a schedule outlining those tenancies. Mr…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Premier Property Developments Ltd v OHL Ltd [2023] NZHC 1962
Case
[2023] NZHC 1962
Decision Date
CaseChat Overview and Summary
In Premier Property Developments Limited v OHL Limited, the court was tasked with determining whether Premier breached statutory and contractual obligations in its sale of a property to OHL. OHL sought to recover damages for alleged misleading or deceptive conduct under the Fair Trading Act 1986 and for breaches of contractual warranties. Premier argued that any loss suffered by OHL was due to OHL's contributory negligence and failure to mitigate.
The court found that Premier's description of the property as "fully leased" was misleading and deceptive, particularly concerning the performance of one of the tenancies. However, the court determined that OHL was not misled or deceived by this conduct, as they were aware of the issues through communications from Premier's agent. Consequently, OHL's statutory claim under the Fair Trading Act was dismissed.
Regarding the contractual warranties, the court held that Premier breached its warranty regarding any undisclosed consent or waiver affecting the property, specifically by not disclosing its agreement to a reduced rent for one of the tenants. However, the court found that OHL's loss was limited to the income lost during the balance of the lease term of the tenant in question. The court also noted that Premier's offer to underwrite the tenant's rent was reasonable for OHL to accept, effectively mitigating any loss arising from the breach.
The court ordered that Premier is entitled to recover the balance of the purchase price from the stakeholder, along with interest, while OHL is liable for the loss of income during the unleased period. Costs were reserved for determination based on further submissions from the parties.